USPS Facing $2 Billion Loss this Year, Says Reform Must Happen Now

Monday, March 12, 2001

Press release from the issuing company

WASHINGTON (3/9/01) Universal mail service is at risk without statutory reform of the laws governing the Postal Service warned the Postal Service Board of Governors following its strategic planning meeting yesterday.
Universal service is the regular delivery of mail to every address across the country – from the biggest city to the smallest village – at uniform and affordable rates. Universal service is a national priority, called for by Congress since the founding of the nation.
The Postal Service is facing a potential loss of $2 billion to $3 billion this fiscal year, reflecting the fact that the organization's costs are rising at a rate exceeding mail volume and revenue growth. After yesterday's meeting, the Board asked management to take unprecedented action on additional cost-control options, including an immediate freeze on capital commitments that will affect over 800 facility projects and significant new reductions in work years and administrative staffing. Management will seek additional opportunities to reduce costs and will report on its progress to the Board at future meetings.
Among the fiscal challenges faced by the Postal Service are wage rate increases that exceed the rate of inflation, escalating fuel costs, changes in the type of mail being processed, a communications marketplace marked by increased competition, and forecasts calling for the diversion of some First-Class Mail to electronic alternatives. Employee compensation accounts for 76 percent of Postal Service costs. The law governing postal operations provides neither a mechanism to control wage rates nor to adjust postage rates quickly in response to market changes.